The Insurance Regulatory and Development Authority of India (Irdai) has granted relaxation to merged public sector banks by allowing them to act as corporate agents of more than three entities in life, general and health insurance companies for a period of twelve months from the date of merger (April 1, 2020) for existing contracts of the acquired banks.
“The acquiring bank may continue arrangement with more than 3 entities in each of the life, general and health categories of insurers for a period of 12 months from the date of merger by transfer of the existing insurance arrangements of the acquired banks to their name by way of an addendum to the existing corporate agency agreement executed by the acquired banks”, the insurance regulator said.
It has clarified that the exemption allows transfer of existing insurance arrangements of acquired banks to the acquiring banks and should not be construed as permission of the authority to enter into new arrangements with other insurers.
The acquiring banks — Punjab National Bank, Canara Bank, Union Bank of India and Indian Bank – will have to submit a board approved policy on adoption of open architecture and on the manner of soliciting and servicing insurance policies within 60 days of the merger.
Moreover, the Irdai has said the acquiring bank can retain the existing certificate of registration (COR) to act as a corporate agent and surrender the COR’s held by the acquired banks.
“The surrender shall be allowed subject to undertaking from the acquiring bank regarding servicing of existing policyholders of acquired banks by entering into suitable arrangement with the insurers that had arrangement with acquired banks”, the Irdai said.
However, in case of non-agreement between concerned insurer and acquiring bank, the insurer shall be responsible for servicing existing policyholders of acquired banks till expiry of the policy term, the regulator added.
Source: Business-Standard 